The coronavirus pandemic has already contracted the worldwide economy, and there is consensus among leading economists that the U.S. will fall into a recession in the third quarter of 2020. During recessions, many enterprises delay, shrink, or cancel data center expansions and hardware refreshes to shift costs from capital expenditures to operating expenses.

Many enterprise computing changes are just an acceleration of already emerging trends, like embracing public cloud and colocation services. However, the COVID-19 outbreak has shed new light on relative advantages and disadvantages of computing delivery models and practical limits to IT transformation.

The following list highlights 10 implications for data center facility strategies resulting from the pandemic. The findings are based upon active project discussions with enterprise clients on data center facility procurement and contract renewal projects.

1.    Facility Access Restrictions — While employee and visitor access into both corporate and third-party colocation data centers has always been tightly controlled, many facilities have further restricted access, balancing general public health concerns with urgent on-site visit needs. Prudent colo operators are continually evolving access procedures as more information about the number of COVID-19 cases in specific geographies becomes available. Some colos have banned any and all visitors in some of their international data centers. 
“During these unprecedented times, Flexential is continuously balancing customer needs with employee safety,” said Mike Krza, COO, Flexential. “As we evolve to appointment-only access for our data centers, we strive to have clear and consistent communications to all parties to ensure expectations are being met.” 
Only a handful of data centers have reported any visitors or employees who tested positive for COVID-19. Those facilities were promptly cleaned, and anyone who may have been at risk of exposure was notified immediately. Most data centers have implemented their business continuity plans, ensuring adequate inventory of on-site supplies, scheduling backup staffing, and confirming generator fuel re-supply contracts.
2.    Limited Layoffs — While corporations may be under pressure to shrink payrolls and encourage or require employees to work from home, the mission critical nature of data center operations coupled with their already low staff levels suggests few facilities will permanently reduce employee headcount. Underscoring the importance of those workers, on March 28, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) clarified in a memo on its website that workers involved in the maintenance and operation of data centers are considered members of the country’s Essential Critical Infrastructure Workforce.
3.    Project Delays — Due to economic constraints, many data center facility capital expenditure budgets are being cut. Some enterprises are delaying new hardware deployments, extending hardware refresh cycles by  six to 18 months, or deferring new project introductions (unrelated to business continuity) by several months. New on-premises data center construction projects will be postponed or cancelled, especially “greenfield” data centers not yet underway. Exceptions are small incremental projects where enterprises can spend modestly to add 100 to 500 kW in critical power capacity at an existing facility as a “Band-Aid” to support deferrals of bigger platform relocations by a few years.
4.    Colo Adoption — Data centers are very capital intensive, both for construction and hardware installations, but colo providers typically fund critical systems at the facility’s expense. Some enterprises that had planned capacity expansions at corporate-operated data centers will shift compute capacity to colos to avoid those costs. Colocation has become a much more attractive delivery model fur to flexibility in contracting (such as expansion/contraction rights), spend-shifting to other locations or managed services, and provisioning cloud direct-connect circuits.
5.    Accelerated Cloud Migration — Many enterprises are accelerating cloud migrations as an alternative to on-premises and colo deployment, reducing upfront hardware expenditures even though some public cloud applications will incur higher run-rate operating expenses over the long term. Cloud deployments can be very fast by traditional IT norms, and this speed-to-market can offer outsized benefits in times of rapid enterprise computing change. The push toward cloud benefits the largest public cloud providers like Amazon Web Services (AWS) as well as colo providers that offer private cloud (more on this in No. 6) and value-added third parties. This has spurred procurement of additional data center capacity in the most prominent cloud locations. One interesting related effect now being evaluated by end users is out-migration (also termed “repatriation”) from the public cloud back to on-premises or colocation suites for applications and data sets that enterprises later determine to be too expensive or problematic for audit/compliance within a public cloud environment.
6.    Private Cloud Adoption — Many enterprises have been worried about security risks and audit/compliance challenges associated with the public cloud, so they are choosing private cloud services from colo providers with an intermediate term contract period of six to 36 months. The colo providers have significantly improved their private cloud services, and, in many cases, can offer the benefits of public cloud (e.g., speed, flexibility, upfront savings) with superior audit/compliance measures by physically hosting the private cloud within the customer’s colo suite or elsewhere in the same building. This approach has been particularly attractive to enterprises on the general path toward cloud adoption that are not yet ready (or convinced) to migrate fully to public cloud.
7.    Managed Services Utilization — As visitor access into data centers has been curtailed, enterprises are expanding use of third-party managed services. When corporate IT staff can’t readily visit their data center suite due to distance or access restrictions, they are increasing reliance on colo provider “smart hands” for hardware and software installs, network optimization, edge deployments, and managed security.  
“We’re seeing a strong increase in customers requesting the managed colocation services we deliver through our deeply experienced and certified data center operations team,” said Mitch Fonseca, vice president of data center products, Cyxtera. “These managed colocation services span from enabling customers to remotely manage their environments through our smart hands support staff, all the way through remotely deploying bare metal compute nodes and have proved to be especially attractive options in the current crisis.”
8.    Colo Contracts — Realizing they won’t get funding to complete facility expansions or new contracts for large colo suites over the next six months, some enterprises are seeking an interim solution by extending current colo contracts by one to two years to buy some time without committing to a longer-term renewal. These efforts will face some interesting pushback from a few colo providers who may see the current situation as a negotiating opportunity to force customers into a longer renewal term than otherwise desired. Taking advantage of market conditions, many shrewd enterprises who properly prepare a contract negotiation plan should be able to capture considerable contract flexibility and low pricing in colo contract extensions. Experienced advisors will assist many enterprises in that plan creation and execution.
9.    Enhancements to Networks and Interconnects — Many enterprises are procuring additional circuits from telecoms and interconnection-focused colocation providers to improve network utilization to support remote workplace tools, including videoconferencing and virtual private networks (VPNs). Network modifications can be complicated, though, as easing remote access runs counter to typical corporate security best practices, so enterprises are also engaging additional security protocols and professional assistance to prevent unauthorized access and data breaches. Audit and compliance processes are receiving extra attention given the newly distributed access to VPNs. Some content delivery networks are reprioritizing data caching and delivery (usually not visible to most end users) to minimize delays in data transmission caused by network bottlenecks.
10.    Modest Demand Spikes — Demand is exploding for a few teleconferencing and co-working applications, like Zoom, Slack, and Microsoft Teams, as well as remote learning tools for schools that have shuttered campuses. However, COVID-19 is not anticipated over the short term to create large demand spikes for mainstream enterprise computing that can’t be effectively handled with modest increases in data center capacity, enhanced telecom networks, and hardware overflow protocols, similar to content caching during the Super Bowl. However, it will be interesting over the intermediate and longer terms to see which applications take hold as a popular replacement to traditional working models. Many colo providers have available space and power in most of their facilities to accommodate requests from enterprises for capacity increases over reasonable contract periods.